The US has questioned India’s “sky-rocketing” rice exports in 2021 and accused it at the WTO of using the ‘Bali interim peace clause’ for over-shooting subsidy limits without meeting the requirement of separately notifying its public stock holding (PSH) programmes.

At the recent Committee on Agriculture meet, New Delhi assured WTO members, that its rice export, pegged at 21.4 million tonnes in 2021, was not sourced from its rice stocks from PSH programmes procured at MSP (minimum support price). 

“The US, however, suggested invoking a special provision in the Bali interim decision to open a consultation with India on the matter. Canada, Japan, the European Union, Paraguay, Thailand, the UK and Uruguay supported Washington’s proposal,” a Geneva-based trade official told BusinessLine.

Breaching subsidy limit

India had informed the WTO in early 2020 that it had breached the subsidy limit fixed at 10 per cent of the value of food production for developing countries (under the Agreement on Agriculture) for rice in 2018-19. It had provided subsidies worth $5 billion to rice farmers against rice production worth $43.67 billion in the period.

To stop other members from taking legal action against the breach, India invoked the ‘peace clause’ agreed to at the WTO’s Bali Ministerial meeting in December 2013 that allowed developing countries to breach subsidy limits on food crops subject to certain conditions being met related to notifications and food security.

“At the recent agriculture meeting, the US and other members said that India failed to fulfil the obligation set out by the Bali interim decision, which requires a separate notification on members’ PSH programmes,” the official said.

A separate notification on all PSH programmes will be difficult for India as it would then have to give details of all MSP operations and numbers related to procurement, storage and disbursement not only for rice but other items covered under the programmes, including wheat and pulses.

“Giving details on procurement of all crops under PSH will not only be logistically a tall order for India but can lead to more scrutiny and criticism as wheat farmers in the US have also been accusing India of breaching subsidy limits for wheat, in addition to rice,” a Delhi-based trade expert said.

With over 40 per cent increase (year-on-year) in India’s rice exports in both 2020 and 2021, and the country now close to accounting for half of the world’s total export of rice, questions on India’s MSP operations have been raised at the WTO. India’s repeated defence that it has submitted all required information on its overall domestic support notifications to the WTO, is not washing down well with many members.

The EU and some others have earlier argued that they needed more proof from India to establish that subsidised rice was not being dumped in the global market. The US suggestion on a special consultation with India, at the agriculture committee meeting, thus, got the immediate support of all such countries., the official said

“If the special consultations on India’s PSH programmes is called and India is not able to convince other members that it has been meeting all notification conditionalities mentioned in the Bali peace clause, then it may lose the immunity against legal action accorded by the clause,” the official added.

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